A new definition of crypto comes from the IRS — Law Decoded, Oct. 17-24
No matter how much attention the United States Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission gets in the crypto industry, for individual traders and investors, it often comes down to the Internal Revenue Service’s (IRS) position — and how much tax one owes.
Last week, the IRS last week released a draft bill featuring a well-defined digital assets section that outlines if and how taxpayers will account for the use of cryptocurrencies, stablecoins and nonfungible tokens (NFTs).
Page 16 of the draft defines digital assets as any digital representations of the value recorded on a “cryptographically secured distributed ledger or any similar technology.” 2021’s tax form required taxpayers to indicate whether they had received, sold or exchanged in “virtual currency” — with this term changing in the yet-to-issued 1040 tax form for 2022.
Taxpayers are required to answer the digital assets section of their income tax return whether or not they have engaged in digital asset transactions during the tax year. A number of situations will require American taxpayers to indicate yes to the question on digital assets of Form 1040 or 1040-SR. This includes receiving as a reward, award or payment for property or services or sold, exchanged, gifted or disposed of a digital asset in 2022.
An amendment to the Financial Services and Markets Bill now before the United Kingdom’s parliament could extend the law’s powers to regulate financial promotion and other activities to crypto assets. According to the explanatory statement accompanying the amendment, the new bill would “clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities
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